What is a Deductible?
Deductible is the amount of money that you must pay before the insurance company will start paying for medical expenses. Your deductible is subtracted from your reimbursable sum when a claim is made. They can be per sickness/injury, per health insurance period or per year and usually applies to each insured member of the policy separately.
Another word that can be used interchangeably with deductible is excess.
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How does a deductible for health insurance work?
There are two key types of deductibles: deductible per medical condition and deductible per year.
1. Deductible per medical condition
The policyholder must pay a percentage of the costs of medical treatment for each medical condition where treatment is necessary.
For instance, provided that a deductible of USD 80 is in place, the policyholder must pay the first USD 80 of treatment per medical condition. If the cost of medical treatment is USDD 240, the policyholder would pay USD 80 and the health insurer would pay the remaining USDD 160.
Once the policyholder has made the medical cost of USD 80, the health insurer will pay for the rest of the medical expense.
However, if the policyholder subsequently acquires a different medical condition which requires treatment, he or she will again pay the first USD 80 of the medical expense.
2. Deductible per year
This type of deductible involves an annual limit. When the policyholder and the health insurer agree on an annual limit, the policyholder must pay for his treatment up to the agreed annual limit. As soon as the annual limit has been reached, the health insurer will take responsibility for the remaining expenses.
If a deductible of USD 80 is in place, the policyholder must pay for the first USD 80 of the treatment they get. The health insurer will then take care of the rest of the medical costs.